In 2021, we launched our Sustainable Finance Roadmap 2021-2024, covering our supervisory remit and setting out how the DFSA intends to respond to the current and potential impact of ESG issues on the financial sector.
The milestones are for illustrative purposes only and in no specific order. Many of these elements are in the process of being shaped at the international and UAE level and progressing in parallel.
As we delivered our sustainable finance vision over the recent years, we focused on:
Building on this work, our sustainable finance agenda will accelerate further in 2023 ahead of and after COP28, which will be hosted by the UAE in November in Dubai. We set out our areas of focus in the DFSA Business Plan 2023/2024, including embedding ESG considerations in corporate governance and risk management; defining the desired approach to corporate ESG disclosures and reporting; and paving the way for a potential UAE ESG taxonomy.
In this fast-moving space, the DFSA will also focus on our approach to ESG-related capital markets, including bond and sukuk markets, so that our guidance continues to meet the objectives of sufficient transparency, consumer protection and discouraging greenwashing, in line with evolving international standards.
As we deliver our priorities, we are working with the UAE Government, UAE regulators, industry and the wider stakeholder community to set robust and pragmatic regulatory frameworks that shape the UAE’s domestic approach to sustainable finance and position the UAE at the forefront of the discussion in the region and globally.
Ian Johnston, Chief Executive of the DFSA, said: "Over the last few years, sustainability has emerged as a top priority for the DFSA. The financial services sector has a pivotal role to play in contributing to the country's sustainability goals. Collaboratively defining a framework for accountability and best practice will encourage the transition to a climate-neutral resource-efficient and resilient economy."
Championing sustainable finance in the DIFC
In September 2020, we published our Discussion Paper on “Championing sustainable finance in the DIFC”. We discussed the possible paths for the DFSA, as the financial regulator of the DIFC, to take a more active role in facilitating the development of sustainable finance in the DIFC in line with our regulatory objectives. We sought feedback from our regulatory community on, among other aspects, adapting our supervisory approach to address sustainable finance issues, further fostering consumer confidence and reducing the risk of greenwashing through ESG-labelled products, and considering sustainability-related disclosure obligations for supervised firms.
The feedback helped us devise our sustainable finance vision as a regulator, which is now represented in our Roadmap.
In November 2021, we launched the DFSA Task Force on Sustainable Finance (TFSF) with several of our authorised firms.
Currently, the following financial institutions are members of the TFSF:
The TFSF has driven forward the debate on sustainable finance to influence and support the DFSA’s work on appropriate understanding, consistent adoption and application of sustainability-related global regulatory standards within the DIFC.
In November 2022, the TFSF presented a collection of short essays on climate and environmental risk management authored by members of the TFSF. The anthology offered a wide range of perspectives from across the financial sector on how best to embed, identify, measure, disclose, analyse, address and mitigate the physical and transition risks for the financial sector stemming from climate change as well as broader environmental risks in the UAE.
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